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We Sell Our Condo (Instead of Renting It)

(Part Four of Renting Out a Condo)

By - March, 2013

Sometimes plans are just a way to get started doing something. Hopefully that something works out well, even if it was not part of the original idea. If you have read the first three installments of this series on buying a condo as a rental, you know that we ran into quite a few unexpected problems. We had a few repairs that we did not budget for, and we discovered that stackable washer/dryer combinations are very expensive.

In the most recent post (in December) I related how we learned our lessons about screening tenants. I probably should have gone into some detail about how to do a search for criminal records online, but the primary part of the process can be explained easily enough: Just search the person's name and "mug shot" (or "mugshot") on Google -- and use any names the prospective tenant uses or might have used in the past.

In any case, we decided to let fate decide how we would profit from our investment. With no renter by December we listed the condo for sale. We kept the rental listing active as well, with the idea that we would either sell it if we got an offer that netted us some small profit, or we would rent it out if that happened first. Nothing much happened in December, except for a good offer that went by the wayside due to a sick relative in the buyer's home country. It can be tough to think about buying a condo when a loved one is ill and the condo is in another country.

By January the "fiscal cliff" was postponed, and some laws that relate to real estate were renewed in Washington, so people felt safer buying property. Our local newspaper announced that prices of homes had risen something like 17% in 2012, prompting people to think abut buying before things get too expensive. A rise like that sounds suspiciously like a bubble getting reinflated, but in any case it was apparently motivating to potential buyers. We started to have regular showings again.

We had a verbal offer that sounded good to us. But then it somehow dropped by many thousands of dollars once it was put on paper. There were also some "weasel clauses" in the contract that we wouldn't have agreed to in any case.

Finally, toward the end of January, we got a solid offer. We closed in early March. We didn't make enough profit to worry about a heavy tax bill, but we made enough to be happy about being done with the process for now (we may buy another rental this year).

Why Sell Our Condo?

We had a few good reasons for wanting to sell the condo, even though we initially intended to rent it out. As it turns out, renting a condo can be tricky. The potential tenants have to apply for association approval, paying $100 for that and $70 for a background check (and they do not get these back if they are rejected). We would prefer more control. The condos here are renting for a little less than we thought as well, and the dues went up just after we bought the place. These two factors made for a lower return on the investment.

In the end, we would have rented it out if that happened first. We were tired of paying the expenses without any income after all. But as an investment, as measured by the cash-on-cash return, we could do better with our money elsewhere in town. We might also consider buying a small business now that we have freed up our capital.

The key thing was that whether we ended up renting it or selling the condo we were going to make some money, and more than the 1% we make on our checking account (yes, you can still get 1% on checking). That flexibility is one of the things that I like about real estate.

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Houses Under Fifty Thousand | Selling Our Condo